Archive for October 2021

The Friday File: When asked to compare two randomly matched different fun-sized candy varietals against one another, the most popular is (drumbeat please) Reese’s Peanut Butter Cups, winning 84.2% of their head-to-head matches against the rest of the field. Reese’s Miniatures followed at 81.9%, Twix was next at 81.6%, then Kit Kat at 76.8% and…

Like many other commodities, the price of oil exhibits a strong seasonal pattern. Since 1986, oil prices start the year low and bottom in mid-February. From there, prices steadily rise and peak in late September at 15% to 20% higher than February’s. Prices then steadily fall during the last quarter of the year. Year to…

The most pressing problem China faces and the one that forced Evergrande’s default, is overreliance on debt. China’s debt has vertiginously risen from 169% of GDP in 2008 to 306%, the same as the US, a developed nation with deep capital markets. Worse, productivity growth is collapsing as the money is increasingly wasted. Moreover, President…

In 19Q4, before Covid-19, the labor force participation rate was 63.2%. It fell to 60.8% in 20Q2, and by 20Q4 the rate had recovered to 61.5%. That is where it has, unfortunately, remained since, meaning that 5.25 million persons have left the labor force. One reason, slightly more than 3 million excess retirements, over and…

Prior to Covid-19, about 1 million applications to form business with employees were made during the first nine months of the year. In 2020, that number was 1.14 million, and through September 2021, the number is a staggering 1.4 million. This means an extra 540,000 new business applications have been made in the Jan-Sept period…

The Friday File: To randomize a deck of 52 cards it is necessary to riffle shuffle the deck manually seven times. With a perfect riffle shuffle, when one card drops from each side, eight shuffles are necessary. It turns out, by naturally varying the number of cards that drop from each side, randomness is achieved…

While existing home sales in September rose a surprisingly strong 7% M-o-M to an annualized rate of a very robust 6.29 million, they decreased 2.3% from the frenzied housing market of a year ago. More interestingly, however, price growth is rapidly decelerating. It has slowed from a Y-o-Y gain of 23.6% in May, to 23.4%…

While September housing starts were dragged down by multifamily starts declining 5% M-o-M, they’re up 38% Y-o-Y, and have been generally rising for the last year. Moreover, the number of multifamily units under construction is currently 701,000, the most since 7/74, almost 40 years ago! High rents are doing what they should, boosting supply. Conversely,…

Forget Forbearance While foreclosure starts are up 32% in 21Q3 Q-o-Q and 67% higher Y-o-Y, they remain spectacularly low. In 21Q3, lenders commenced foreclosures on 25,209 units, traditionally they have numbered 40,000/month. Last year, in some months foreclosures numbered as few as 4,000/month. Moreover, just 1.4 million borrowers remain in foreclosure with the number now…

The yield spread between the 5-year Treasury and the 30-year has recently narrowed despite rising inflation fears. The 5-year rate is up along with inflation, the 30-yr rate has barely budged. This is because markets now expect the Fed to raise rates sooner than later. That will weaken inflation and slow growth, both of which…